The Hindu Business Line : SERC allows Bengal power distributors to hike tariff

While CESC Ltd expressed satisfaction over the tariff hike, WBSEDCL reports an estimated negative impact of Rs 300 crore on the bottomline during this fiscal, as the company has not been allowed to recover previous cost increases with retrospective effect.

Our Bureau

Kolkata, Nov. 27

Approximately 94 lakh power consumers of West Bengal are set to pay a higher energy bill beginning November, primarily because of coal price hike.

In an interim order issued on Thursday, the West Bengal State Electricity Regulatory Commission has allowed the State power distribution utility West Bengal State Electricity Distribution Company Ltd (WBSEDCL) to increase tariff by 78 paise a unit. The Kolkata-based private sector generation-cum-distribution company CESC Ltd has been granted 48 paise increase in tariff per unit.

Relatively smaller distributors such as the Asansol-based private distributor DPSC Ltd and Durgapur-based State Government undertaking Durgapur Projects Ltd (DPL) have been allowed tariff increase by 46 paise and 24 paise a unit respectively.

WBSEDCL and CESC are the two largest distributors in the State. While CESC generates bulk of its requirements for distribution, WBSEDCL depends on State generation utilities for supplies.

Mixed reaction

Interestingly, while CESC Ltd expressed satisfaction over the tariff hike, WBSEDCL reports an estimated negative impact of Rs 300 crore on the bottomline during this fiscal, as the company has not been allowed to recover previous cost increases with retrospective effect. The company posted a net profit of Rs 61 crore in 2008-09.

According to the WBSEDCL Managing Director, Mr Moloy De, the previous ruling for tariff increase by the regulatory authority in July 2009 did not allow WBSEDCL to recover the annual cost push of approximately Rs 800-900 crore on account of fuel price hike and fixed arrears for capacity addition (by the generation utility).

The issue was raised by the distribution utility through a fresh petition filed before the regulator in September-October. “While issuing its interim order, the regulator has largely agreed to our plea for a suitable hike in power tariff for cost recovery. However, contrary to our expectation, we were not allowed to recover the same with retrospective effect beginning April, 2009,” Mr De told Business Line.

“While a back of the envelope calculation suggests that the cost push is enough to erode the profitability of the company, we are hopeful to compensate the loss through power trading and reduction in T&D loss,” he said.

The State utility loses Rs 200 crore on account of a higher 22 per cent T&D loss as against the approved 18.25 per cent. Increase in power trade may be a reality provided the power generation improves in the next few months, as expected.